I dont' know if you did this or not, but Windows must be on the C partition, it won't work properly unless it is (inferiority complex?). Linux will work on any partition. With LILO (LInux LOader) installed on the C drive you can choose to boot Windows or Linux.
I've heard that Red Hat 7.0 is still buggy, so that could be part of your problem. I used SuSE 7.0 and had no installation problems at all. If you try SuSE you'll have to download the eval7.0 ISO. They don't have ISO's for their entire distribution.